I HAVE been reading about the hullabaloo over the intention of the government to sell their 20% stake in GT&T, and I really cannot understand why anyone would object to such a transaction.

From an investor’s point of view, this is the best time to sell those shares. Let me explain why.

Shortly, GT&T’s monopoly licence will come to an end, and I am sure the government has no intention of renewing that deal. The monopoly licence gives the telephone company a stranglehold on international connections, which is their greatest competitive advantage.

It is where they are able to generate a significant amount of their revenues. But with the end of the licence, that revenue will dwindle significantly.

Now any good investor worth his salt will realise that shares in the telephone company are going to be worth much more now than they will be worth after the end of the licence. To this end, the government is trying to unload the shares NOW — to get the best deal they can.

Also, this explains why ATN, the parent company of GT&T, has declined to purchase the shares. They know that they can, if they so desire, purchase the shares at a much reduced price.

Of course, the government cannot say this is the reason why they are selling the shares, because, like ATN, any potential buyers will hold their hand until the end of the licence for the price to go down.

Now, to shoot the PNCR’s contention that the GT&T shares bring in a sweet dividend every year, and that Government should not sell the shares as a result, any management accountant will tell you that past costs and revenues are not relevant to the making of any decision; only future costs and revenues matter.

Therefore, all the dividends that the government has received in the past are irrelevant; only future dividends matter. And given that there will be less revenue after the end of the licence, there will be much less dividends.

Now, was that not a simple matter to understand?
PREITY SEEMANGAL